Recession, divorce, inheritance, and many other factors require us to proactively reorient our personal and financial priorities.
There is a big difference between predicting the future and anticipating it. The former has shown to be difficult, if not impossible. But anticipating future events is possible. We can also take the next step, considering our priorities, both personal and financial, before those anticipated things happen.
Mark Twain said, “To change your life, you need to change your priorities.” While Twain certainly had a point, often the reverse happens. Your life changes and you need to change your priorities. The catch? Life rarely gives you “a heads up” that it’s going to change. The best we can do is take a stab at anticipating what paths life will open up to us. So, how do you do that?
Start with thinking that the anticipating/prioritizing process is really peeking around the corner, a sort of structured game of “What if?” And history provides us many guideposts. For example, we’ve had a dozen recessions in the U.S. since WWII. The time between recessions varies from just a few years to almost a decade.
So, how do you anticipate a recession? You acknowledge that one will come. It may not be this year or next year, but one will come. And when it does, what will your priorities be if money tightens, both personal and financial?
And what about forces of change closer to home? What if you come into a windfall from business or inheritance? A friend once said, “It’s easy to plan for prosperity.” And while he may be right, you still have to plan for it. Or alternatively, your family experiences unexpected financial strain from a health crisis or something similar? Either circumstance requires a reshuffling of priorities.
Marriages, even happy ones, can end. So, what if yours does? Or alternatively, you find the love of your life, get married and start having kids? Again, either path requires multiple reprioritizations. And, of course, life ends for all of us, and as unpleasant as that is to think about, we need to. What if we die younger than expected? Or on the other hand, what if we live into our 90s, or even 100s? What then?
Not all priority adjustments are reactive. You may wake up one day and decide you want to rethink your philanthropy, or the way you share your legacy with those close to you, or you want to make sure your investments are environmentally friendly.
Whatever the changes, reactive or proactive, in most cases, they will trigger not only an emotional response, but will require a financial response as well. That’s where your advisor comes in. In my view, whatever the change in priorities, there is an ideal solution, a bull’s eye, if you will, that an effective wealth manager should be aiming for. But since that bull’s eye is a moving target, how do they know when and how to offer that solution?
How? By being considered a participant in your life, not a bystander, and achieving that through a disciplined process of probing with openness and supportive questions. It takes work to be aware of and anticipate changes that will affect you and your family, both reactive and proactive changes, and make the necessary priority adjustments in your financial plan.
One might think of this approach as an advisor keeping the financial gears of your life moving, and they do need to shift, not just to keep up with change, but to anticipate it, too. As another friend has said, “Inertia during change is not a plan.”